BUILDERS FEAR HOME SLUMP IN TRUMAN CURBS (July 19, 1950)

Part 1Jul 19, 1950

BUILDERS, FEAR HOME SLUMP IN

TRUMAN CURBS Restrictions in Face of

Shortages Decried

Restrictions on housing credit ordered by President Truman will reduce new home construction, builders said last night. They ex- plained the moves to increase re- quired down payments will strike a severe blow at the mass market for new homes.

Some resentment was expressed at the President's choice of hous- ing for his first economic control action since the Korean war start- ed. Builders contended that other lines should have been hit first because the country s greatest shortage is in housing, and home construction does not compete as directly with military needs as other activities.

"There is no question but that the order will slow down housing construction," said Martin C. Hug- gett, executive vice president of the Chicago Metropolitan Home BuilderS association.

Effects Less Severe Here

"However, the effect will be felt less in Chicago than in some other areas because loans have been made on a much more con- servative basis here. There have been very few 100 per cent vet- erans loans in this area. The 5 per cent down payments now required have been quite a common prac- tice here."

The Truman order to raise down payments if appraised values are increased will have some effect in slowing down rising prices in building materials, said Ilugcett.

Irvin A. Blietz, north shore builder, said the restrictions " very definitely" will cut back new home construction. The down payment requirements will affect the largest volume field, he said, altho larger cash payments gen- erally have been required in Chi- cago home purchases than in other sections of the country.

George F. Nixon, head of George F. Nixon & Co., said the Truman order should have a beneficial ef- fect in curbing inflationary tend- encies in new construction. He said soaring prices are a greater threat to home building volume than the credit control action.

Housing Need Still Acute

Joseph E. Merrion, south side builder, emphasized the need for home construction still is so great as to constitute an emergency. Builders, he said, have been fight- ing their way thru the huge - ing job and have at last got a big volume of construction in prog- ress. He called it surprising that the President should move to make credit more difficult to get for the home buyer.

In Washington a spokesman for the housing and home finance agency said the effect of the President's order limiting public housing construction starts to 30,000 units would be about a 25 per cent cut in the number of units which had been planned for the last half of 1950.

But the official added that this estimate did not mean that there will be a prorated cut of 25 per cent. Some communities with plans in shape are ready to let contracts and others are not. He said it would be " silly " to penal- ize those communities which are ready if the others cannot make a start before the end of the year.

Chicago Position Uncertain

In Chicago, about 6,000 units are scheduled. Those for which

contracts have been let can be started, the housing source stated, but those in the planning stage must be screened in line .w. ith toe Presidential order. The spokesman said Chicago might get all or most of its units if other communities have lagged in pre- paring plans or letting contracts, or it might suffer more than the contemplated nation-wide 25 per cent cut if it is not ready to pro- ceed with the proposed construc- tion.

Ald. Lancaster [37th], chair- man of the city council housing committee, said the order restrict- ing construction of public housing would have no immediate effect on Chicago's proposed program for 11,550 to 15,050 new dwelling units under the federal program.

Lancaster explained that few, if any, of the projects could be placed under construction this year because of the time consum- ing job of acquiring sites and pre- paring architectural plans. The projects still must be approved by the city council.